Editor’s Note: This article is excerpted from Brad McMillan’s new book, Crash-Test Investing.

There are many excellent books on investing. Most of them, however, assume you have lots of interest in and time to spend on managing your money. Most people don’t.

In that way, investing is like driving a car. For some people, it is fun and exciting, even a bit dangerous, but for most people, it’s simply a way to get where you want to go as quickly and safely as possible.

Unfortunately, with investing, just as with driving a car, sometimes you get into trouble. When the weather gets bad, when other drivers act irresponsibly, whatever it might be, crashes happen. That’s when you are very glad to be wearing your seat belt.

This book offers a way to invest with seat belts, which can help you survive a market crash with minimum damage. Cars come with seat belts, but investing has been different. The standard belief is that occasional crashes are unpredictable and unavoidable, and people simply must accept that and ride them out.

Historically—from, say, 1950 through 2000—it was possible to do just that. Many people saved, retired, and did well. It made sense to sit tight and ride out any downturns. Indeed, the argument that what has worked in the past will work in the future is a powerful one.

I contend, however, that conditions have changed. With two crashes in the past 20 years—and with market conditions now (in mid-2018) disturbingly like they were prior to those earlier crashes—we’re dealing with a different reality.

Strategies that have worked in the past may not work in the future. Expectations that people have had in the past may not be met. Betting that everything will be the same in the next 20 years as it has been in the past 20 is no longer a reliable proposition.

This book will show you how to invest successfully while significantly lowering your risk of serious loss—even in a crash—without making it a full-time job.

Most Main Street Investors Want Safety

As Main Street investors, we want a simple portfolio that is inexpensive and minimizes drawdown risk, and we need to be able to manage it on the road in real life. Fortunately, we have the tools to do just that, and Wall Street has provided us with products that will allow us to meet our goals—products that are both inexpensive and good.

As you may have surmised by now, you will need two types of investments in your portfolio: stocks and bonds. Think of these as the two main wheels on your vehicle; much like a motorcycle, they should get you where you are headed.

Motorcycles are typically much faster than regular cars, but they also are more unsteady. A four-wheel car can handle conditions that a motorcycle can’t, and it is steadier and more comfortable along the way. Fortunately, we can continue using the driving analogy, as we will be adding two more components to our portfolio: gold as an active holding and cash as a placeholder. These four wheels—stocks, bonds, gold, and cash—will drive our portfolio forward.

Want Less Risk, Accept Lower Returns

How do these pieces fit together? To put it simply, we are going to try to move out of the market when risk levels look high. To use our driving metaphor again, when ice starts building up, visibility is down, and driving becomes scarier, we are simply going to pull over and wait until conditions improve by selling out and sitting in cash.

This is, to put it mildly, not common practice in the investment world. Many would point out, correctly, that this would lower returns in bull markets. You can find statistics about how much lower your returns would have been had you missed the 10 best days in the market. The conventional argument is that it is simply not possible to predict crashes, and, therefore, it makes no sense to try to avoid them.

These arguments are sound—but they are beside the point. Let’s take a step back and look at what we are trying to do here, which is lower risk, just as adding seat belts to a car does. No one today would argue against seat belts, but imagine what a car manufacturer in the 1950s, before seat belts were mandatory, might have said:

“We can never predict when a car will be in a crash, and it is simply impossible to end all crashes; therefore, the idea of installing these new ‘seat belts’ is simply silly. Besides, if we add seat belts, the extra weight will slow down the car. Even then, in a severe enough accident, passengers would be injured regardless. No, driving is simply a risky business, and anyone in a car has to accept those risks.”

The car manufacturer has some good points. We can’t eliminate all auto accidents; this is true. It is also true that in some number of accidents, they will be bad enough that people will be injured or killed. It is even true that seat belts and other safety features add weight and cost to the car and do in fact slow it down a bit. Yet none of these facts takes into consideration that seat belts save thousands of lives every year. I would argue that investment portfolio safety precautions can have similar benefits.

Let’s look at it from another perspective: it’s impossible to predict the weather more than about a week ahead of time and nearly impossible to predict the path of, say, a hurricane even a couple of days ahead. Does that make weather predictions or hurricane warnings useless? Certainly not. When the potential damage is high enough, some kind of early warning and protective measures may well be worth it, even though there will be some cost involved. Overall, you may regret the times you put up hurricane shutters if the storm does not show, but when it does, your precautions will pay for all the times the storm passed you by.

We are not trying to increase our returns here—we probably will not—but to reduce our risk. Like a seat belt, these measures won’t eliminate either the possibility of crashes or the risks we take, but they will substantially improve our odds of achieving our goals, which is all we are looking for.

2008 Was Not A One-Time Event

We all remember the crash of 2008. It was not a one-time event. In fact, stock market crashes happen fairly regularly, so we need to plan for them like we would any other life event.

First, let’s look at 1987. You may be old enough to remember it. It remains the largest single-day percentage crash in the U.S. markets. The Dow Jones Industrial Average dropped more than 25 percent. How could we defend against a downturn like this?

A conventional portfolio, say 60-percent stocks and 40-percent bonds, would have been exposed to a 15-percent drop in one day simply from its exposure to stocks. As you may remember from our earlier risk discussions, a 15-percent drop would require a larger recovery—in this case, 20 percent—to break even. More to the point, for individuals who retired in 1987, their entire retirement plan could have been crippled for decades by that one-time event. Just like the Ford Pinto car, a “Pinto” portfolio can experience catastrophic results in a crash.

In 2000, when the dot-com boom turned to bust, the Nasdaq technology stock index dropped by more than 60 percent and the S&P 500 by more than 40 percent. Many investors were exposed to tech stocks, so if they held 60 percent in the Nasdaq, for example—and many held more—they would have experienced a 36-percent drop in the portfolio as a whole. Note that it took 15 years for the Nasdaq to recover and pass its previous high. Even for a conservative investor in the S&P 500, the loss would have been almost 15 percent. Imagine if you were a college student preparing to start your freshman year or a new retiree in 2000.

In 2008, the S&P 500 dropped more than 50 percent. Again, for the conventional portfolio with a 60-percent weighting in stocks, that’s a loss of more than 30 percent. As you can see, twice in the past 20 years—and three times in the past 30—the market has blown up in a way that could have destroyed the financial plans of many individuals, including retirees and college students.

These are scary numbers. They become even scarier when you consider that, in Wall Street terms, a 60/40 portfolio is moderately conservative. The target return on a portfolio like this is typically in the 8-percent range. Yet three times in the past 30 years, a moderately conservative portfolio has dropped between 15 percent and 30 percent.

This simply doesn’t have to be the case, as we will see. What the average investor needs is a portfolio that has been crash tested—one that has seat belts to minimize our risk of blowing up. This is our goal, and this is what we will discuss in the coming chapters.

Diversification With An Insurance Policy

What we are doing here is creating a diversified portfolio, using stocks and bonds as most investors do, but also adding gold as an insurance policy against threats to the system itself, such as those we saw in 2008 and 2009. We are then taking that diversified portfolio and, every month, using the 200-day moving average to determine whether each asset class is at risk of a significant decline in the near future. If it is, we are moving that part of the portfolio to cash.

From a Wall Street perspective, we can view this approach as the Permanent Portfolio idea combined with a moving average overlay. Each idea has power individually, as we have seen, but together they are more effective in managing drawdown risk, allowing us to meet our initial goal—of keeping portfolio losses to a maximum of 10 percent—even in the worst circumstances.

By keeping the stock allocation to 33 percent, we limit our upside, but we also limit our risk. Moreover, by using the moving average strategy, we keep our average returns high enough that the lower allocation is sufficient for our needs. By allocating 33 percent to bonds, we maintain a steady stream of interest income, as well as the potential upside if the economy weakens. By adding gold, we insure against the possibility of risk to the system as a whole. Finally, by being willing to go to cash, we add another layer of safety.

Is this a perfect system? Of course not. It has real costs, with taxes potentially being the largest. It has real risks, notably of underperformance in bull markets. It is not perfect, and it is certainly not for everyone.

It is, however, designed for one particular investor—the one who needs stock market exposure but can’t bear stock market risk. For the retiree, for the college saver, that reduced drawdown risk can more than compensate for the real costs and risks of the strategy.

For the Main Street investor, what matters is the destination. That is the idea of this book. By adding seat belts to your portfolio, you can help improve your chances of getting where you want to go with a minimum of risk.

Brad McMillan is the chief investment officer at Commonwealth Financial Network.